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Question

What are the tax consequences for me if I give my sister $12,000 cash this year and am I required to have the 20% federal income tax withholding taken from the $12,000 I withdraw? The $12,000 will be taken from a workplace savings 401K (37520). I am 63, retired, and my 2008 effective tax rate was 14.70%. My adjusted gross income for 2008 was $76,433 and my 2008 taxable income was $59,820. I expect my 2009 income and deductions to be in this same range.

Submitted: 57 days and 9 hours ago.
Category: Tax
Value: $30
Status: CLOSED
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Country/State/Province of question: TX

Accepted Answer

Sophie,

The tax withholding will be 20% of the $12K. If you expect your effective tax rate to be less than that, you would receive some back in form of a refund when you file next year. The $12K gift to your sister is less than the allowed $13K maximum annual gift, so there will be no gift tax or reporting requirement of this gift. Please let me know if you have further questions.

Regards,

XXXX X

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Expert: Mark D
Pos. Feedback: 99.6 %
Accepts: 
Answered: 9/26/2009

Tax Preparer

MBA, CTEC Registered, CPA Firm Experience with Business and Individual Tax Returns and Issues

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